A Pediatricians' Raw Experience in Private Independent Medical Practice on the front lines.

Tuesday, August 8, 2017

The Little County That Could: The Fight in Lee County, Georgia for Hospital Choice

…“I think I can.I think I can. I know I can,” The
Little Engine that Could.

As hospital consolidations sweep the nation, the
monopolies being created are like insurmountable peaks over which rural communities
must climb on their quest to find affordable healthcare.Lee County, in Southern Georgia, is a little place
with big dreams; they are resolutely determined to build a 60-bed community hospital
and provide local residents with real choices.For years, two competing hospitals served the population of 200,000 spread
over six counties:Phoebe-Putney and
Palmyra Park. Phoebe-Putney Memorial Hospital put an end to that by securing a
939-bed hospital monopoly and an ample market share.

Their efforts began in 2003, when Phoebe-Putney
Memorial Hospital in Albany, Georgia successfully opposed a bid for a Certificate
of Need (CON) to open an outpatient surgery center.Frustrated from a free-market perspective, accountant
Charles Rehberg and a local surgeon, John Bagnato, began sending anonymous
faxes to local business and political leaders, criticizing the financial activities
of the local hospital. These faxes quickly
gained notoriety, becoming known as “Phoebe Factoids.”Concerned about negative publicity, Phoebe
Putney executives hired FBI agents to intimidate these men.

Undeterred, these two renegades discovered Phoebe-Putney
Hospital was charging uninsured patients far more for services than insured
patients.This brought widespread attention
to the plight facing millions of uninsured Americans.Many began to question what obligation a
nonprofit hospital has to provide charity care for those in need.Phoebe-Putney was caught using aggressive
collection tactics, such as wage garnishment and the placing of liens on homes of
patients unable to keep up with payments.Their experience inspired a documentary called “Do No
Harm.”

In-depth research uncovered millions hidden in
offshore bank accounts disguised under the auspices of a non-profit— not only
at Phoebe, but also at other non-profit hospitals across the country. As whistleblowers, Rehberg and Bagnato were subsequently
targeted by Phoebe and indicted on fraudulent charges of telephone harassment,
aggravated assault and burglary; charges without merit which were dismissed in
2006.

After successfully blocking the surgery center CON,
Phoebe-Putney set its sights elsewhere looking to acquire the only other hospital
facility in the surrounding six-county area:Palmyra Park.In 2011, the
Federal Trade Commission (FTC) attempted to block this proposal on the grounds
that the combined entity would control in excess of 85% of the market share. Phoebes’ CEO insisted hospital consolidation was
necessary to deliver cost-effective, high-quality medical care, calling the merger
“the right thing for citizens.’’ The
FTC argued the deal was anti-competitive (which it was) and health costs would
increase significantly (which they did.)The FTC secured a preliminary injunction but Phoebe prevailed, arguing Georgia
CON laws prohibited the sale of Palmyra Park to an independent entity.

Ultimately, the FTC was obligated to settle with
Phoebe, making the dream of a hospital monopoly a reality.However, the settlement had three
stipulations:1) Public acknowledgement the
acquisition would substantially lessen competition within the six-county market;
2) Phoebe was required to provide the FTC with prior notice of transactions acquiring
any part of a general acute-care hospital, or controlling interest in other
facilities; and 3) Phoebe was precluded from opposing CON applications from
other entities for five years.

Barring Phoebe from challenging CON applications was
an innovative solution to a monopolized region; however, Phoebe already handily
dominated the market.The Certificate of
Need process is expensive and time-consuming; therefore, legal experts anticipated
this limitation alone would be ineffective in enticing new competitors to enter
the region. Yet, predictions can sometimes
be incorrect.

Enter “The Little County That Could,” a.k.a Lee
County, Georgia, with its population of 29,000 and land mass of 362 square
miles. The community and their steely
resolve have yielded unexpectedly positive results.Lee County officials filed
a Certificate of Need application for a 60-bed hospital earlier this year.The Lee County Development Authority will own
the hospital structure and a separate entity will lease the facility. Services offered will include acute and
emergency care, including an ICU, medical/surgical unit, inpatient and
outpatient beds, and full radiology capabilities, such as CT and MRI. The hospital will create more than 350
"good-paying jobs" and provide access to health care for all,
regardless of their ability to pay.

While Phoebe Putney agreed not to challenge a CON
application until 2020, the settlement does not preclude engaging in “sneaky”
public relations tactics.Phoebe
commissioned a study to calculate the effect the Lee County Medical Center would
have on the financial outlook for Phoebe-Putney. DHG Healthcare projected
Phoebe will lose more than $250 million in revenue over five years. The
firm found by the third year of operation, annual losses will be $30.1 million
for inpatient care, $23.7 million in outpatient care, and $6.4 million for
emergency care at Phoebe.

Lee County is on their way to achieving something extraordinary;
challenging the dominance of a hospital monopoly. On July 21, 2017, the CON application for Lee
County was deemed complete
by the Georgia Department of Community Health.A decision is anticipated by Nov.
15. If granted, the county plans to
break ground on the new structure in early 2018. The CEO of Lee County Medical
Center, Mr. G. Edward Alexander, stated “Our goal is to ensure that decisions
for the hospital are made locally by people who live and work in Lee County.”

Lee County, I salute you.Medically underserved communities everywhere are
supporting your efforts to transform the healthcare landscape for the better.May your success inspire a revolution,
proving that healthcare can be repaired by patients, physicians, and
communities – working together.